Fuel price

Namibia’s fuel prices remain unchanged for the month of July, the Ministry of Mines and Energy confirmed in a press statement yesterday. At Walvis Bay pump prices will therefore remain N$13,05 for 95-Octane petrol and diesel remains at N$13,63 per liter, as this fuel station sign (above) in the harbour town indicates.

In the statement the Ministry explained although there was an over-recovery situation in the Namibian oil market [it cost lest to import than what it is delivered to the consumer], a number of negative market conditions internationally led to the decision not to reduce fuel prices.
In June crude oil prices and fuel spot market prices came under pressure as a result of the slowing world economy [a slow economy needs less fuel as there is less economic and production activities] and also the United State’s national fuel inventories which were very high.
These two situation quenched the thirst for oil worldwide and a sub-subsequent price drop.
However, tensions between the United States and the Islamic Republic of Iran has just the opposite effect. In the event of a looming crisis such as an armed conflict economies tend to start absorb oil and fuel in order to have enough should a war for instance put a supply disruption to global oil and fuel flows. That in the past weeks upped oil and fuel prices against, especially after two oil tankers were attacked in the Strait of Hormuz off Iran. A significant portion of the world’s crude oil and fuel passes through the Strait of Hormuz and in the event of an armed conflict tanker shipping would be severely disrupted and a shortage of fuel would develop and subsequent high fuel prices.
In the event of an over-recovery, such as what Namibia saw in June, a fuel price drop is almost a logic consequence. However, the Ministry explained in prior months to June there was an under-recovery on fuel sales in the country and this negative price difference had to be absorbed by Namibia’s National Energy Fund. Hence the decision to keep fuel prices unchanged, in order for the National Energy Fund to be replenished [a portion of the price of fuel per litre the consumer pays goes to the National Energy Fund to provide for during under-recovery situations].

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